Current Trends Demand Integrated Payments Technology

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1 Current Trends Demand Integrated s Technology s technology has experienced evolutionary changes in the past decade with increased adaptation of card-based and electronic payments for both B2C and B2B payments. Emerging innovations within technology companies & financial institutions are driving such changes. The highly fragmented nature of the sector increases acquisition opportunities for both financial and strategic acquirers, targeting state of the art technology and established brands. Strategic acquirers are mainly looking for three core capabilities a) to add alternative payment processing capabilities, b) integrate payment systems and c) enhance mobile and electronic payment functionality. 60 US Non-cash Transaction Volume Sector Growth is Steady s technology has experienced strong growth since the economic downturn, primarily driven by growing demand for newer payment methods and increased volume of transactions for both card-based and ACH transactions. Sector has maintained growth despite margin pressure caused by increasing competition for payment processing and in expanding regulatory climate. Ubiquity of e-commerce, growing popularity of mobile devices and increased demand for convenient payment tools are driving significant growth in the sector. Steadily Check-based payments steadily declined (Fed Study) as B2C and B2B payments shifted toward card-based and electronic transactions. Social network-based payment technologies created new market opportunities. Technology Innovation is Key Sector Driver Significant advances in contactless payment technology such as near field communications (NFC), quick response codes (QR), and cloud- based payment solutions are shaping consumer payment behavior Traditional incumbent card payment methods with Magnetic Stripe, EMV chip and PIN identification are facing major competition. Emerging alternative financial services technologies to serve under banked customers directly competes with traditional banking checking account and debit card solutions. Integrated cloud-based payment technology, which connects various POS systems, accounting, ERP processes and payment processing software, streamline and automate the payment process. Continued Capital Investment in Early Stage s Venture capital investments in payment technology companies reached a 5 year high with over $1 billion invested in 193 companies. Major focus of early stage investments ranged from a) mobile & online payments, b) point-of-sale technology, c) payment processing technology and d) alternative payment services. Venture arms of both financial service companies (American Express and Citi) and technology giants (Google & Intel), joined traditional venture capital firms investing in niche capabilities and innovative technologies (in billions) Debit card Credit Card ACH Checks Private Level Prepaid P Source: Federal Reserve Study P, Headwaters -tech Projection

2 Reflecting on 2014 M&A Activity: Focus is Online, Mobile, Card technology and Integrated Technology in Niche Markets High recurring revenue, long term customer contracts, diversified customer base and steady top-line growth has made payment technology companies one of the most attractive targets for acquisition. Moreover, constant evolution and innovation within the payment industry, increased online and mobile payment transactions, and competitive pressures forced established players to either improve R&D or acquire innovative technology providers to stay competitive. Not surprisingly, 2014 M&A activity to date had 3 major themes, a) integrated payment technology b) electronic and mobile payments and c) payment processing platforms. Strategic Acquisitions FleetCor s acquisition of Comdata for $3.4 billion marks a substantial milestone for the company as it increases scale and adds complementary alternative payments technology. As an issuer and a processor, Comdata provides fleet, virtual card, and gift card solutions to over 20,000 customers and enables over $54 billion in payments annually. The recent acquisition of Evolution1 by WEX Inc. for $532 million, provides cloud-based technology and payments solutions for the healthcare industry, integrates consumers, providers, payers, systems and data to provide a single end-to-end user experience. Vantiv s acquisition of Mercury s for $1.6 billion to obtain an integrated payments technology for various point of sale systems to serve online and omni-channel commerce, and Global s acquisition of PayPros for $420 million with capabilities to provide fully-integrated payment solutions for 58,000 small-to-medium sized merchants in the U.S., shows a common strategy focused on new vertical markets to accelerate growth. Financial Acquirers Warburg Pincus, the global private investment firm with a focus on financial technology, acquired transportation payments technology provider EFS Electronic Funds Source, which was majority owned by Pilot, for over $1 billion. EFS offers a range of private-label cards and mobile applications for transportation companies and their employees that are accepted at more than 10,000 locations across North America. The Nashville, Tennesseebased company was created in 2011 with the merger of First Data Corp's EFS transportation services business and Transportation Clearing House. Date Announced Target Acquirer Enterprise Value ($mil) EV/ REV Target Core Business 8/29/2014 Moneycorp Bridgepoint $ x Integrated Online s 8/12/2014 Comdata Inc. FleetCor Technologies, Inc. $3, x B2B Electronic 8/8/2014 SafeNet Gemalto $ x Digital Information Security for Fund Transfer 7/30/2014 TouchNet Information Systems Heartland Systems $ x Integrated Commerce 7/21/2014 Welch ATM Cardtronics $160 - Retail ATM Services 7/21/2014 Retail Decisions (ReD) ACI Worldwide $ x E-commerce Fraud Prevention 7/1/2014 Meritus s Optimal s $ x Online s and Risk Management 6/16/2014 Evolution1 WEX $532 - Electronic s 6/12/2014 MPayMe Powa $75 2.5x Mobile Technology 5/28/2014 Euroline Nordic Capital $332 - Card Acquiring Solution 5/27/2014 Check Intuit $ x Mobile Bill 5/12/2014 Mercury Systems Vantiv $1, x Integrated 4/16/2014 Electronic Funds Source (EFS) Warburg Pincus $1, Corporate Transportation 3/31/2014 Andera Bottomline Technologies $48 5.4x Electronic Technology 3/24/2014 NETS Group Advent International, ATP, Bain Capital Ventures $3, x 3/10/2014 HiFX Plc Euronet Worldwide, Inc. $ x Electronic International Money Transfer 2/4/2014 BlueKite Xoom Corporation $15 - Electronic Cross Border Bill 1/24/2014 PayPros Global s $ x Integrated Merchant Solution

3 Technology Services Card Issuer/ Publicly Traded Companies Trading Metrics 52-Week ($ in millions, except per share data) Stock Price Range Market Enterprise EV/ EV/ Category/Sector Company Ticker Price Low High Cap Value Revenue EBITDA American Express Company NYSE:AXP $90.0 $72.1 $96 $94,680 $134, x N/A Blackhawk Network Holdings NASDAQ:HAWK ,470 1, x 12.7x Discover Financial Services NYSE:DFS ,290 42, x N/A FleetCor Technologies NYSE: FLT ,760 12, x 23.4x MasterCard NYSE:MA ,630 84, x 16.0x Visa Inc. NYSE:V , , x 16.3x WEX Inc. NYSE: WEX ,390 4, x 15.7x Euronet Worldwide Inc. NASDAQ:EEFT ,790 2, x 14.7x EVERTEC, NYSE:EVTC ,830 2, x 16.8x Global s Inc. NYSE:GPN ,940 6, x 11.9x Heartland Systems NYSE:HPY ,400 1, x 11.5x Higher One Holdings, NYSE:ONE x 6.1x Ingenico EPA:ING ,040 4, x 15.6x Vantiv, Inc. NYSE:VNTV ,310 7, x 14.0x Alliance Data System NYSE:ADS ,510 24, x N/A CassInformationSystems NASDAQ:CASS x 9.7x Deluxe Corporation NYSE:DLX ,980 3, x 9.4x Moneygram International Inc. NasdaqGS:MGI , x 6.2x The Western Union Company NYSE:WU ,260 11, x 8.2x ACI Worldwide, Inc. NASDAQ:ACIW ,210 2, x 13.9x Bottomline Technologies NASDAQ:EPAY , x 30.6x DH Corporation TSE: DH ,710 3, x 13.9x Digital River, Inc. NASDAQ:DRIV x 6.1x Fidelity National Information Services NYSE:FIS ,500 20, x 12.8x Fiserv, Inc. NasdaqGS:FISV ,260 19, x 13.6x NCR Corp NYSE: NCR ,580 9, x 9.4x Qiwi plc NASDAQ:QIWI ,940 1, x 13.1x TotalSystemSvcs NasdaqGS:TSYS x 9.5x VeriFone Systems, Inc. NYSE:PAY ,960 4, x 25.3x 15.0x LTM Enterprise Value/Revenue 40.0x LTM Enterprise Value/EBITDA 35.0x 10.0x Industry Average 30.0x 25.0x Industry Average 5.0x 2.8x 2.7x 2.6x 7.2x 20.0x 15.0x 10.0x 5.0x 12.9x 8.4x 14.8x 16.8x 0.0x Services Technology Card Issuer/ 0.0x Services Technology Card Issuer/ Data as of , Source: Capital IQ

4 M&A Outlook Increased competition between established financial institutions and technology innovators will create an ideal environment for consolidation for the following reasons: a) add capabilities to existing technology platform; b) expand product lines by acquiring complementary solutions; c) add niche products by leveraging existing brand and customer relationships. While we expect the continued consolidation within payment companies, some headwinds are expected from regulatory reforms and compliance requirements. Despite such challenges, consolidation will continue primarily due to improved valuation multiples and favorable sector trends. Headwaters Financial Technology Coverage Universe Telematics Cloud/ SaaS Processor Platform Gateway MSOs Fraud Detection BPO POS Securities Trading s Risk Management Trading Analytics Capital Markets Card Issuer Da Credit Monitoring Risk Management Banks Insurance Predictive Analytics Loan origination Mobile banking Risk Assessment Mobile Big Data Recent Financial Technology Transactions

5 Headwaters Financial Technology Team If you are an owner of a or Financial Technology business and would like to learn more about how best to maximize your company s value or grow through an acquisition, please contact Headwaters Financial Technology Team. David Francione Managing Director Thirteen Highland Cir, Suite C Needham, MA Office: (617) Cell: (617) dfrancione@headwatersmb.com David Francione, Managing Director, has over 18 years of experience as an investment banker, corporate development executive and management consultant. Previously, Mr. Francione served as Senior Vice President at Silverwood Partners, a global investment banking firm. Prior to joining Silverwood Partners, Mr. Francione was head of corporate development for Elcom International, Inc., a $500 million international publicly-traded ecommerce technology platform company. Mr. Francione began his career with SS&C Technologies (Nasdaq: SSNC), a leader in securities processing software and analytics and then joined the investment banking group at Advest, Inc. (acquired by Merrill Lynch), where he focused on public offerings, mergers and acquisitions, private financings and valuations for financial services, technology and consumer products companies. Jit Basak, Ph.D. Senior Associate Thirteen Highland Cir, Suite C Needham, MA Office: (617) Cell: Jbasak@headwatersmb.com Jit Basak, Senior Associate, has over 10 years of professional experience most recently at Pfizer, Inc. Dr. Basak holds an MBA in Finance from University of Connecticut and PhD in Chemistry from University of Illinois at Chicago and an alumnus of IIT Kanpur, India. Mr. Francione holds a Bachelor of Science degree in Finance from CCSU and earned an MBA in finance from the University of Connecticut. He served as a member of the board of directors for the University of Connecticut alumni association and was co-chair of its investment committee and an adjunct faculty member. About Headwaters MB Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisitions, corporate finance services and merchant banking through proprietary sources of capital. Headwaters is headquartered in Denver, CO, with 6 regional offices across the United States and partnerships with 16firms covering 25 countries. For more information, visit